Paytm in talks to raise up to US$2B from SoftBank; looking to buy FreeCharge from Snapdeal

With this all-cash deal, the Indian m-commerce and mobile payments company’s valuation will go up to US$9 billion

Paytm, a leading mobile payments and commerce platform owned and operated by Noida-based One97 Communications, is in talks to raise between US$1.2 billion and US$1.5 billion from Japanese Internet giant SoftBank Group, according to a report by Mint. With this all-cash deal, Paytm’s valuation will go up to US$9 billion, said the report quoting three unidentified sources.

The deal has been in the works for the past three months. As per the deal, SoftBank will buy some shares from existing investor SAIF Partners and Founder and CEO Vijay Shekhar Sharma.

The Mint report further added that Paytm is also looking to buy online mobile charging platform FreeCharge from e-Delhi-headquartered commerce firm Snapdeal, which has been struggling to survive in the market.

The report comes a few weeks after Alibaba Singapore, a wholly-owned subsidiary of Chinese e-commerce honcho Alibaba Group, is infused US$177 million into the e-commerce division of Paytm, which looks to raise a total of US$200 from this round.

Founded in 2008, Paytm has been a key player in the e-commerce and payments segments in India. Started off as a mobile recharge company, Paytm later expanded into digital commerce space. To date, Paytm has raised close to US$1 billion in total funding from the likes of SAIF Partners, Sapphire Venture and Silicon Valley Bank, and well-known industrialist Ratan Tata. A few months ago, the company launched its payments bank, which can accept deposits from individuals and small businesses of up to INR 1 lakh (US$1,500) per account.

The firm is directly competing with Amazon, Flipkart, ShopClues and Snapdeal in the commerce pace. In the payments space, it is facing competition from MobiKwik (backed by Mediatek and Japanese firm GMO), and FreeCharge (which was acquired by Snapdeal for about US$540 million in April 2015).

The e-commerce space has seen a lot of consolidation in the recent past. Early this month, Flipkart acquired eBay India and announced a US$1.5 billion funding. As per some reports, Snapdeal is in talks to sell to Flipkart to take global giant Amazon head on.